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Stocks Pick Up Steam, Greek Referendum May Be Off The Table

Wall Street added to its gain in the hour before noon Thursday, on reports that a national Greek referendum on the latest European bailout for the debt-riddled country may never get off the ground.

With the G20 gathering in France this weekend, tough talk from French and German leaders has suggested that a vote against the bailout in Greece equals a decision to leave the euro. Greek Prime Minister George Papandreou, whose surprise call for the referendum threw the European crisis into fresh turmoil this week, said Thursday that he would never place membership in the common currency up for referendum, according to TradeTheNews.com.

Fractures in the Greek government — Papandreou’s own finance minister is said to be among those who oppose his referendum call — make it a challenge to sort out the potential endgame. With doubts growing about whether a nationwide vote on the bailout will happen, markets appeared to take the latest news as a signal that Greece will ultimately take its medicine. That sent U.S. stocks higher before midday, with the Dow Jones industrial average up 138 points to 11,974, the S&P 500 gained 13 points to 1,251 and the Nasdaq 32 points to 2,672.

Greece, of course, is a small fish in a big European pond, and the bigger concern is what the inability to resolve the crisis there says about far-bigger markets at risk in Italy and Spain. Italian 10-year government bond yields declined slightly to about 6.15% Thursday, but remain at elevated levels.

Earlier Thursday, the European Central Bank cut its benchmark interest rate under new president Mario Draghi. In his press conference following the move, Draghi expressed confidence that the Greek rescue measures will be implemented, while warning that the Euro zone is likely heading into recession.

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